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You and your partner may be a pair but your retirement savings aren’t in sync. You may have established some steady savings and are in good shape but your partner is not. He or she may have very little saved or hasn’t got started at all, focusing on other goals instead.
What steps can you take to help a spouse or significant other bolster their retirement savings? Let’s take a look.
1. Hold regular budgeting meetings
Sit down together once a week or once a month and talk over finances with your spouse. Discuss savings, spending, income and investments.
“One of my favorite tips is to hold a weekly family budgeting meeting,” says Ron Strobel, a Certified Financial Planner with Retire Sensibly in Meridian, Idaho. “Both spouses will sit down together for about 10 minutes to review their expenses for the past week, expected expenses for the upcoming week, savings and income.
“This allows the spouses to support each other in reaching their budgeting and savings goals with a structured process that is on their to-do list each week,” Strobel adds. “It eliminates any surprises when the monthly credit card statement shows up and the regular meetings can improve the relationship their family has with money.”
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2. Make good use of a raise
One easy way to increase retirement savings is to give it a lift any time you get a raise. Keep some of the raise — you earned it — but add the rest to your retirement. This is a good strategy for you and your partner.
“One of the less painful ways to increase retirement savings is to increase contributions each time you earn a raise,” says Bryan Minogue, a certified financial planner and founder of Kardinal Financial in Madison, Wisconsin. “For example, if your spouse gets a 3% raise, take that opportunity to increase their retirement deferral by 1%. This way they still get an increase in take-home pay and increase their retirement savings simultaneously.”
3. Make a spousal contribution to an IRA
A spousal contribution to an IRA is a great way to support a spouse’s retirement savings when he or she doesn’t have any earned income of their own.
“Spousal IRAs are an equalizer when one spouse works while the other takes a career break, perhaps to lean into family life,” says Madison Sharick, a Chartered Financial Analyst at Madi Manages Money in Pittsburgh. This type of contribution is an exception to the rule that an individual who contributes to an IRA must have earned income. “Spousal IRA contributions enable both spouses to continue to accumulate retirement assets, even if one currently isn’t earning,” Sharick adds. “The family as a whole benefits from the tax savings.”
4. Use all retirement options
Make sure you and your spouse understand all the retirement plan options available to your family and then use these plans to build your retirement savings.
“People often think that they can’t save in an IRA if they have a 401(k) or 403(b). That’s not true,” says Justin Pritchard, a Certified Financial Planner at Approach Financial in Montrose, Colorado. “There may be limitations on getting a deduction or making Roth IRA contributions, but even those options may be available, depending on your income. Make sure you’re using all of the options available to add to your savings.”
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5. Review account balances
Take time to review your retirement savings with your spouse. Where are each of you today and where would you like to be when you retire in 20 years?
“Sometimes knowing where you stand can motivate you to save more,” says Pritchard. “If you’re coming up short on retirement savings, both of you need to know that. And that knowledge might motivate everybody to tighten the belt and prioritize savings.
“If you understand what’s in your control and what steps to take, you’re more likely to reach your goals.”
6. Plan together
The beginning of the year is an excellent time to review your retirement plans with your spouse and decide on a strategy for the new year. How much will each of you contribute in the new year?
“Who plans to contribute what amount to each account?” Sharick says. This is important for tax-advantaged accounts that come with “family contribution limits,” like health savings accounts. “Based on your game plan, encourage your spouse to set up automatic contributions that happen in the background all year,” Sharick advises. “Paving the path of least resistance and acting as an accountability buddy is a recipe for bolstering your family’s retirement savings.”
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7. Mend disagreements
If you and your partner have differing financial priorities this may affect your partner’s willingness to save more for retirement.
“One of the primary sources of disagreement for couples is having different financial goals,” says Jesse Carlucci, a Certified Financial Planner and investment officer at Arrow Investment Management in Oklahoma City. “Each person in the relationship may have varying priorities, such as saving for retirement, buying a home, starting a business, or pursuing personal interests.
“To address this issue, couples should engage in open and honest communication about their financial aspirations,” Carlucci adds. “Regular discussions can help identify common ground, prioritize goals and create a joint retirement plan that reflects shared values and objectives.
“Compromise and flexibility are key in finding a balance between individual aspirations and shared financial goals.”
Lucy Lazarony is a freelance journalist living in south Florida who writes about personal finances, the arts and nonprofits. Her writing Is featured on Next Avenue, Bankrate, MoneyRates.com, MSN and the National Endowment for Financial Education. She previously worked as a staff writer at Bankrate.
This article is reprinted by permission from NextAvenue.org, ©2024 Twin Cities Public Television, Inc. All rights reserved.
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